A new Chinese shopping app selling trendy clothes at rock-bottom prices is shaking up the fast fashion turf war in the United States.
Temu, a sister company to Chinese online marketplace Pinduoduo that sells everything from distressed denim to AirPods cases, ranked among the top 10 most downloaded shopping apps on Apple’s App Store less than a month after its US launch, according to an analytics firm. Apptopia.
It’s a familiar story to fashion insiders and consumers alike: a previously unknown retailer with close ties to Chinese apparel manufacturers is exploding into the US market with seemingly limitless selection and surprisingly low prices. Shein used this formula to become the most downloaded fast fashion shopping app in the US in the first half of this year, and a host of other newcomers have successfully emulated aspects of this business model.
Like Shein, Temu is an engaging, if not addictive, platform connecting Chinese producers to consumers around the world. Pinduoduo sells much more than clothes, and while Temu seems to be more fashion-oriented, it also offers electronics and household items. It could give customers a reason to linger beyond ordering an Instagram-ready look.
Temu’s rapid rise is also a sign of how Shein has changed the fast fashion market. New retailers can cause a stir without first grooming consumers with carefully crafted marketing campaigns, celebrity endorsements, or promotions. At the same time, success is more ephemeral: there is always another faster and cheaper seller looking to grab their share of the market.
“Shein … has created an environment where consumers are prepared for these brands,” said Nora Kleinewillinghoefer, associate partner in fashion, luxury and retail at consultancy Kearney. “There are an incredible number of consumers ready to try it.”
Pinduoduo declined to comment for this story.
To earn a permanent place in the US market, Temu needs to build loyalty among cost-conscious buyers, who are squeezed by high inflation and who, at the same time, quickly abandon a platform if their needs aren’t met. Success isn’t guaranteed: Wish, an online marketplace that sells a range of products from merchants in China to US consumers at unbelievable prices, has built a strong stable of customers only to see its user base dwindle as shoppers lost confidence in the quality of its service. .
What are Temu and Pinduoduo?
Temu is an American application created by Pinduoduo, a digital shopping giant in China. Alongside its main rivals, JD.com and Alibaba, Pinduduo sells a mixed bag of goods at very attractive prices. The company, which went public on the Nasdaq stock exchange in 2018, generated nearly $5 billion in revenue in its most recent quarter ending in June. Pinduoduo had over 700 million monthly active users in 2021.
Pinduoduo’s spin on retail allows “teams” of users to purchase goods at lower prices than they could as individuals. Merchants sell their goods directly to buyers, and sellers bear the cost of shipping those goods.
Temu seeks to offer a more curated product selection by handpicking merchandise from merchants that will arrive at its site and storing that merchandise in a warehouse. When customers visit Temu’s site or app, they are greeted by vertical slideshows displaying items grouped by promotional categories, including a flash sale and items under $3.99, on which visitors can click to buy. The app does not offer the “team” shopping functionality offered by Pinduoduo.
Temu items are shipped from international suppliers, primarily based in China, and may take a week or more to deliver.
Who are Temu’s biggest rivals?
Temu is the most serious threat to Shein’s dominance to date.
By leveraging Pinduoduo’s existing relationships with vendors, Temu can add new items to its platform in the blink of an eye. The company currently uploads thousands of articles to the site daily. This has been a key advantage for Shein, which has been able to offer many more styles than historic fast fashion players like Zara or low-cost online retailers like Boohoo or Asos.
Temu also has a key asset that most of Shein’s rivals wouldn’t have: the support of his huge parent. Pinduoduo’s market capitalization is around $80 billion (Shein was valued at $100 billion after raising around $1 billion in April, according to media reports, although startup valuations have fallen since then) .
Temu’s strategy is along the lines of “if Shein can do it, so can we,” said Robin Zhu, senior analyst specializing in China-based internet companies at research firm AB Bernstein.
But Shein’s singular focus on selling apparel and accessories has allowed her to permeate social media with influencers creating engaging content such as the hugely popular “Shein hauls,” where designers style a variety of outfits. from large packages they ordered from the retailer, Zhu said.
Temu will have to create content for the wider selection of product categories it offers, which could make it harder for the retailer to gain similar brand recognition, he added. There’s still some way to go to match Shein’s cultural impact: Temu’s Instagram account has just over 1,000 followers; Shein is closing in on 26 million.
What will determine if Temu succeeds?
Temu saw early traction. Its app was downloaded on Google’s Android app store, Google Play and Apple’s app store more than 400,000 times in September, according to Apptopia.
To be more than another quick-fashion flash in the pan, it has to give those early adopters a reason to come back, Kearney’s Kleinewillinghoefer said.
That turned out to be tricky, considering it can be hard to tell which of the countless online fast fashion retailers made that $4 flowy dress or that $6 graphic tee.
Online marketplace Wish enjoyed huge popularity in the late 2010s and saw the number of monthly active users grow 19% year-over-year to 107 million in 2020. But many Wish buyers have stopped using the site, frustrated with delays and longer-than-expected shipping items. which did not live up to what merchants had promised on the site. It reported 74 million active users last year. The shares fell after the company’s IPO in late 2020 and are currently trading below $1 on the Nasdaq.
Because Temu screens the products that come to its site, instead of just connecting buyers and sellers, it’s better equipped to ensure the items it offers meet customer expectations, Bernstein’s Zhu said. .
For its part, Temu has implemented a number of quality controls. For one thing, the company is currently refunding customers for products that arrive later than originally expected, are damaged, or appear different from their image on the site. Temu also prefers to work with merchants who have already sold their wares to customers overseas.
“It’s their job to make sure the quality control is right,” Zhu said.